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House Small Business Committee Hears Retailers’ EMV Perspective

Thursday, October 22, 2015 6:30 AM

The U.S. House Small Business Committee heard merchants Wednesday on their views of the EMV liability shift and payments security.

CUNA wrote to and met with committee members in advance of the hearing, and submitted a letter for the record, outlining the EMV system and emphasizing how merchant security, along with financial institutions, are integral to protecting consumer data.

While most of the witnesses before the committee disagreed about the cost and burden of shifting to acceptance of chip-enabled credit or debit cards, one witness said investing in EMV readers was a wise decision. As the owner of a small business, Jami Wade knows that protecting her customers’ data is important, because a single breach could cause irreparable harm to her business and reputation.

Wade owns Capitol City CORK and Provisions and runs Capitol City Cinema, both in Jefferson City, Mo., and said credit and debit cards are the “lifeblood” of her businesses.

“Approximately 90 percent of our restaurant sales are made through debit and credit card transactions. When a customer pays with a card, I always know that I’m going to get paid, get paid quickly, and get paid without hassle,” she said, adding that she does not accept checks because of the risks she might not get paid. “It seems customers are willing to spend a little more, whether it’s an extra glass of wine or dessert, if they are paying with cards instead of cash. For a small business that’s valuable.”

That’s why, she told the committee, she made the investment in EMV technology as a way to protect her customers and her business’s reputation.

“Potential [fraud] liability would be seriously detrimental to our business, especially at Capitol City CORK. This is why I made the business decision to upgrade to a terminal that can read chip-enabled payment cards at Capitol City CORK and Capitol City Cinema,” she said. “The total cost for a new chip-enabled terminal at Capitol City CORK is about $300."

"Yes, this is an out-of-the-ordinary expense for the restaurant, but I do not consider it to be a financial burden given the peace of mind that a new terminal will provide," she added. "I look at it as paying a small premium for an insurance policy to protect the restaurant against a potentially significant downside.”

Though her business has never had an issue with fraud, Wade knows how damaging exposed consumer data can be. Her husband was the victim of a data breach several years ago, and thieves ran up $7,000 worth of costs using his stolen information.

Another witness, Ed Mierzwinski, consumer program director and senior fellow at the U.S. Public Interest Research Group, said the United States lags behind other countries in terms of card security.

“To better deter ‘card-present’ or in-person fraud, Canada and Europe switched to much stronger chip-and-PIN technology over a decade ago,” he said, adding that magnetic strip technology hasn’t evolved since its inception in the 1970s.